AdSense is an advertising program run by Google. Website owners can enroll in this program to enable text and image advertisements on their sites. These ads are administered by Google and generate revenue on either a per-click or per-thousand-ads-displayed basis. Google utilizes its search technology to serve ads based on website content, the user’s geographical location, and other factors. Those wanting to advertise with Google’s targeted ad system may sign up through AdWords. AdSense has become a popular method of placing advertising on a website because the ads are less intrusive than most banners, and the content of the ads is often relevant to the website.
Many sites use AdSense to monetize their content and some webmasters work hard to maximize their own AdSense income. They do this in three ways:
- They use a wide range of traffic generating techniques including but not limited to online advertising.
- They build valuable content on their sites; content which attracts AdSense ads and which pay out the most when they get clicked.
- They use copy on their websites that encourage clicks on Ads. Note that Google prohibits people from using phrases like “Click on my AdSense ads” to increase click rates. Phrases accepted are “Sponsored Links” and “Advertisements”.
The source of all AdSense income is the AdWords program which in turn has a complex pricing model based on a Vickrey second price auction, in that it commands an advertiser to submit a sealed bid (not observable by competitors). Additionally, for any given click received, advertisers only pay one bid increment above the second-highest bid.